40% more hackathons were organized by corporates in 2018 than in 2016. To understand what’s driving this surge, we dived into our Hackathon.com database to learn more about the new trends in corporate innovation strategies, and how corporate-run hackathons have evolved over the years. We focused our analysis on two types of hackathons: public hackathons, where companies tap into the expertise of external parties, and internal hackathons run predominantly for employees.

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Surging Hackathon Popularity Has Many Sources

Public hackathons make up 64% of the total hackathons run in 2018. Unsurprisingly, tech companies are the largest player (27%) among all industries to host these events. They’re in it for the community-building and evangelization benefits. But what drives the remaining 73% of public hackathons run by non-tech companies in industries such as manufacturing and transportation (12% and 11% respectively, closely followed by the healthcare and telecoms sectors)?

“Once used only by IT, the hackathon has been reinvented over the years as a vehicle to drive innovation across the organization but also as a way for companies to collaborate with the developer and startup communities to create and build innovative solutions,” explains Cyril Attia, Founder of Hackathon.com.

The rise in the hackathon’s popularity among traditional industries is linked to the fact that organizations increasingly look outward for innovations they can add to their product lines. Doing so means avoiding long R&D and approval processes, which are no longer sustainable because of constant, rapid technological evolution. Hackathons conveniently solve that for companies, giving them access to innovators in the developer and startup communities.

Hackathons are also an effective way to gather developer feedback. Many of our own hackathon partners came on board in order to get feedback on their APIs, SDKs or developer portal. Running hackathons with that in mind will improve the way you interact with developers. Some companies even join hackathons with their competitor to check how they perform in comparison. What an efficient market study!

Companies are also using both internal and external public hackathons to strengthen relationships with partners and clients. A traditional company might partner up with a tech company so that participants can create solutions to a business challenge while using the partner’s technology. Tech companies, too, find a favorable evangelization and/or relationship-building opportunity, targeting partners or external developers.‍

Form Follows Function

As industries look to hackathons to enliven product lines, hackathons have shifted in response, evolving from a mere marketing stunt to a more refined, objective-oriented event, structured to better meet business goals. For instance, the ‘invite-only’ hackathon format is gaining popularity. In this format, carefully selected startups are invited to create innovative solutions that answer specific business needs identified by the host company. The host offers the winning startup a business contract along with funding to further develop the solution and launch the product in close collaboration with them. t It’s an efficient and beneficial matchmaking solution for both parties, and we expect to see more of it going forward.

Recruitment hackathons are also on the rise. Here companies use the rapid prototyping event as a way to test skills, to network and to spot talent without necessarily communicating their recruitment objectives. It’s a powerful way for traditional companies to enhance their employer branding among developer communities, by demonstrating their involvement with emerging technologies and by communicating their innovation initiatives in a unique and engaging way.

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The Rise of the Intrapreneur

Moving on to internal hackathons, research finds a whopping 37% increase in these over the past two years. The main adopters are the financial services (18%), manufacturing (17%) and retail industries (16%).

The growth of internal hackathons stems from companies realizing that training employees on the agile methodologies used by startups, and then combining that with internal expertise generates valuable ideas for a business. Some companies then pull teams out of their daily jobs to develop projects further in an internal incubator. In other cases, mockups or prototypes may be sent off to an external agency to be transformed into a minimum viable product (MVP) ready for market testing.

Companies doing this seek to foster intrapreneurship, enhance the culture of innovation among employees and promote better cross-departmental collaboration. For them, hackathons-as-a-process is becoming a critical part of organizational culture. We’re likely to see the strategy more frequently among corporates in the coming years.

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The Outlook for Hackathons in 2019

“2018 was the year of hackathons and we’re expecting 2019 to be no different. … (H)ackathons are increasingly becoming a critical part of the modern enterprise, and many will adopt the hackathon approach as a way of identifying and recruiting top talent, increase employee engagement or simply drive innovation and improve company branding. The future of corporate innovation is here and hackathons are at the forefront of driving digital transformation across the board,” adds John Karp, Co-Founder of Hackathon.com.

The hackathon space has grown since non-tech companies began adopting it earlier in the decade. They feel an urgency to innovate in order to keep up with a fast-paced technological environment. Companies realize that the solution lies in maintaining a close relationship with developer and startup communities who can supply the needed innovation. This reality will continue to drive companies in 2019 and beyond. As a result, we predict that hackathons will remain relevant across all industries for some time to come.

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In summary...

An ever-changing technological environment has fueled corporate reliance on hackathons, which play an important role in innovation and company strategy. Our research shows:

1. Robust growth in both internal and external hackathons. Companies staged40% more hackathons in 2018 than in 2016. The growth took place in both tech and traditional industries.

2. Companies embrace hackathons for a number of reasons. These include:

Connecting with and building communities, and strengthening relationships with partners and clients

Product Evangelization

3. Hackathons are tailored to better meet the needs of businesses.These include the invite-only hackathon and recruitment hackathon formats.

4. Companies use internal hackathons to foster intrapreneurship. The result is hackathons-as-a-process, a movement whereby companies integrate hackathons into company culture in order to achieve strategic innovation goals.

5. Hackathons will continue to increase in importance and frequency.They address the ongoing reality of constant technological change. The hackathon trend will continue through 2019 and beyond.